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Bondss investors can avoid risk that interest rates will rise and drive bond
prices down by:
a. Buying zero coupon bonds
b. Buying treasury bonds
c. Holding bonds over the year
d. Holding bonds till maturity
2. Which of the following is considered to have the biggest impact on bond
yields?
a. Economic growth
b. Business cycles
c. Inflation
d. Federal reserve action
5. Which of the following yield curve theories expect investors to stay in one
maturity segment, regardless of opportunities in other maturity segments?
a. Expectations theory
b. Liquidity preference theory
c. Market segmentation theory
d. None of the above
6. Since
a.
b.
c.
d.
the 1930, the yield curve most likely to be seen has been the:
Upward sloping yield curve
Downward sloping yield curve
Flat yield curve
Skewed yield curve
a.
b.
c.
d.
15.An options that allows the investor to buy stock under the specified
conditions is called a:
a. Call
b. Put
c. Derivative
d. Future
16.An adoption that allows the investor to sell stock under specified conditions is
called a:
a. Call
b. Put
c. Derivative
d. Future
17.The exercise price on an option is also known as the:
a. Premium
b. Strike price
c. Theoretical value
d. Spot price
18.Which of the following statements is true regarding American and European
options?
a. American options can be exercised only at expiration
b. American options can be exercised only in the last week prior to
expiration
c. European options can be exercised only at expiration
d. European options can be exercised any time prior to expiration
19.Which of the following statements is true regarding a call writer:
a. The call writer expects the stock to move upward
b. The call writer expects the stock to remain the same or move down
c. The call writer expects the stock to split
d. The call writer expects the to sell stock prior to expiration of the option
20.To hedge a short sale, an investor could:
a. Buy a call
b. Write a call
c. Buy a put
d. Write a put
21.A writer of a call can terminate that particular contract anytime before its
expiration by:
a. Writing a second call
b. Buying a put
Black-Sholes model,
All of the inputs except two are observable
All of the inputs except one are observable
The greater the stock price, the lower the price of the call option
There is an inverse relationship between the value of a call and interest
rates in the market
a.
b.
c.
d.
Arbitrage
Delivery
Offset
hedging
37.when
a.
b.
c.
d.
38.which
a.
b.
c.
d.